The Federal Reserve left interest rates unchanged and near zero as the central bank projected a slow economic recovery from the pandemic-induced recession.
In their first economic projections this year, Fed officials indicated that they expected the unemployment rate to end 2020 at 9.3 percent and remain elevated for years, coming in at 5.5 percent in 2022, The New York Times’s Jeanna Smialek reports.
Output is expected to be 6.5 percent lower at the end of this year than it was in the final quarter of 2019.
“Nearly 20 million jobs have been lost on net since February,” the Fed chair, Jerome H. Powell, said at a news conference following the release of the forecast, and noted that the figure probably understates the extent of unemployment. “The downturn has not fallen equally on all Americans.”
The new forecasts predict a much slower path back to economic strength than the Trump administration — and perhaps the stock market — seems to expect as the economy climbs out of a virus-spurred downturn. The Fed skipped its quarterly economic summary in March as the pandemic gripped the United States, sowing uncertainty as business activity came to a near standstill.
“The projections highlight what a long slog the recovery will be,” Steven Friedman, senior macroeconomist at MacKay Shields, said in a note.
The Fed said that it would continue buying government-backed debt “at least at the current pace” to sustain smooth market functioning, and that it “will closely monitor developments and is prepared to adjust its plans as appropriate.”
